Affirm Holdings, a leading financial technology company, experienced a boost in its stock as J.P. Morgan analysts recognized the increasing adoption of its “buy now pay later” service. John Hecht and his team upgraded their rating for the stock from Underperform to Neutral and raised the price target to $30 from $9.50.
During premarket trading on Tuesday, Affirm’s stock saw a gain of 1.6%, reaching $29.85. The company’s popularity surged during the pandemic as more Americans turned to online shopping, and Affirm capitalized on this by offering consumers the option to split their purchase payments into installments. However, concerns about rising issuer funding costs due to higher interest rates caused the stock to decrease significantly from its peak of around $160 two years ago.
Despite this setback, Affirm has been able to partially recover this year, with shares experiencing a 203% increase. On Cyber Monday alone, the stock gained 12%. In support of this positive momentum, Hecht referred to data from Adobe Analytics, an online shopping tracker, which highlighted Monday as the largest online shopping day in U.S. history. The report also showed that Americans engaged in “buy now, pay later” activity at record levels.
Hecht emphasized that Affirm is positioned as the primary beneficiary of the growing pay-later trend as it continues to gain market share. Over the past year, the company has onboarded approximately 21,000 new merchants, including popular platforms like Kayak, Booking.com, and Tik Tok shop.
However, Affirm is not without competition. Apple launched a similar service earlier this year, posing a challenge to the company’s dominance in this sector. Investors interested in learning more about Affirm’s outlook will have the opportunity to do so at a Wells Fargo conference later today.